DMIST Publishes Consultation Paper On Position Transfers

DMIST, the Derivatives Market Institute for Standards, today published a proposed standard aimed at improving the processing of position transfers in the exchange-traded derivatives markets. This is the third standard proposed by DMIST, an independent organization formed by FIA in July 2022, to promote greater efficiency in the trading and clearing workflow for derivatives.

Today's action kicks off a consultation process with industry stakeholders that will last until March 21. DMIST aims to finalize the standard by the end of the Q2 2025. Any member of the public may submit a comment, and DMIST will post all comments at its website.

The proposed Standard Regarding Position Transfers applies to the process of moving an open position from one account to another at the same clearing member firm or between different clearing member firms. Position Transfers are used to manage risk, optimize margin, correct allocations, balance portfolios, change clearing relationships and address changes in beneficial ownership due to mergers and acquisitions.

Today the Position Transfer process is almost completely manual. DMIST believes a standard would increase operational efficiency and resiliency, reduce operational and regulatory risk by minimizing manual touch points, and simplify communication between clearing members and their clients. The development of this standard represents the first step towards automating the process.

Samina Anwar, Director of Derivatives Operations at Cargill and Chair of the DMIST Sponsor Board, said: “Position transfers are vital for clients to manage risk and optimize margins effectively. Many clients face inefficiencies and delays due to varying processes across clearing brokers. A standardized template for requesting position transfers will streamline workflows, enhance accuracy, and significantly reduce errors in both requesting and booking transfers.

Don Byron, Executive Director, DMIST: "Today's release of the proposed standard continues DMIST efforts to address some long-standing pain points in the trading and clearing process. The standard is designed to improve efficiency, reduce risk and increase the speed at which a position transfer can be completed. Through this effort, DMIST continues to serve the industry as a driving force for consistency, resilience, and common-sense solutions.”

Tim Hoopes, Executive Director, Morgan Stanley and Leader of the DMIST Position Transfer Working Group: “This is an exciting step toward improving an important process with longstanding challenges for the industry. Not only does the proposed Position Transfer Standard provide immediate efficiency and risk reduction benefits to clients, clearing members, and CCPs by streamlining communication and reducing the need for data transformation, it also strengthens the pathways to increased automation of this process in the future.

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Proposed standard

The Consultation Paper: Standard Regarding Position Transfers recommends publishing a standard that establishes 1) a template clients can use to submit a Position Transfer Request to its Clearing Member(s) and a standard template for Clearing Members to more easily upload Position Transfer data to CCPs; and (2) a corresponding standard template for CCPs to adopt for receiving data from Clearing Members.

It also seeks comment on the timing for simple and complex position transfers. It recommends that simple position transfers requested five hours ahead of the market clearing close be completed the same day. Complex position transfers that require exchange approval should be completed 48 hours ahead of the nearest market clearing close. The standard also recommends that the Client send the Client Request Form simultaneously to both the originating and receiving clearing members.

The FIA Operations Americas Division, with input from FIA's European and Asian Operations Committees, submitted a proposal to the DMIST Sponsor Board in May 2024 to standardize Position Transfers. The Sponsor Board approved the proposal and formed a DMIST Working Group, which reviewed and enriched the proposal.

Don Byron: “This was the first time a standard was proposed by a group external to DMIST. The Division’s proposal not only laid the groundwork for the DMIST Working Group to draft a consultation paper, it sped up the process. We welcome standard proposals from members of the public as well as DMIST and FIA members.”

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DMIST encourages widespread adoption of standards in the exchange-traded and cleared derivatives industry that will help make markets more efficient, resilient, and competitive for all.

DMIST has 35 members including executing and clearing brokers, exchanges and clearinghouses, clients and service providers. Approximately 200 representatives from these firms contribute to the identification, development and implementation of standards.